Angus at Work

Intricacies of Direct Marketing Beef

March 01, 2022 Angus Beef Bulletin Season 1 Episode 2
Angus at Work
Intricacies of Direct Marketing Beef
Show Notes Transcript

Kasey chats with SDSU meat scientists and ranchers Amanda Blair and Christina Bakker about the intricacies of direct marketing beef well. There are plenty of things to think about before starting a direct marketing venture — genetics, nutrition, facilities, marketing and more. 

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Hello and welcome to Angus at Work. I'm your host, Kasey Brown. Does it feel like “supply chain” is a dirty word right now? You hear it on the radio, you see it in the news, and I've seen plenty of memes about it on social media. But really that's not exactly what we're here to talk about today. We're going to talk about shortening that supply chain.

Kasey Brown:

Yes, direct marketing has gained popularity since the pandemic started, but it's not a new concept. It is a subject near and dear to my heart, because direct marketing was a large part of my own family's operation back home in Indiana. I got to sit down with two experts from South Dakota state university about direct marketing beef and the intricacies that can go into it to be successful. So, let's dig in.

Kasey Brown:

All right. Hello. This is Kasey Brown. We are in Rapid City, South Dakota for the range beef cow symposium. This conference is hosted every two years and we're really excited that we actually get to attend this year. I'm sitting down with Dr. Amanda Blair and Dr. Christina Bakker. Thank you for joining me this morning. Can you tell me a little bit about your background with the beef industry?

Amanda Blair:

Well, sure. I grew up on a small beef operation and then got into kind of the beef industry through the meat science world. I went to college and got involved in meat science and came to South Dakota State university in a professor role back in 2007. But South Dakota's really been a state with that strong tradition and a lot of diversity in the beef industry. So it's really been a fun experience to work with beef producers and kind of bring that meat perspective to them and a lot of the research and extension and outreach that we do.

Kasey Brown:

And Dr. Bakker?

Christina Bakker:

So I grew up on a purebred Red Angus operation in southwest Minnesota, and I got into the meat industry by meat judging in FFA. And I came to SDSU as a high schooler doing those meat competitions. And I came to SDSU for my undergrad and I worked in the meat lab. And then I just stayed in the meat realm and I did meat judging for collegiate. And then last year I joined the staff as an extension meat science field specialist, and I'll be starting as an assistant professor next week.

Kasey Brown:

All right. Congratulations.

Christina Bakker:

Thank you.

Kasey Brown:

Excellent. So your topic this morning was on direct marketing and what breeders need to know about the management considerations and then also what they need to know about the meat side too. We all know that COVID has shaken everything up. Tell me a little bit about kind of why this has become such a big topic right now.

Amanda Blair:

Sure. I think Dr. Bakker and I really noticed shortly after the pandemic and everything kind of started to shut down, we started getting a lot of calls from producers that were interested in doing more direct marketing because they were seeing what was going on globally with the pandemic in terms of shortages caused by supply chain issues and declining processing capacity because of plants shutting down. We've all seen pictures of the grocery store shelves being empty. No meat on the shelves. And that really got a lot of them thinking, I'm sitting here with beef, maybe it's overfinished or I can't get it into a feedlot or things like that. How can I help to solve that issue? And one of those routes was going through smaller processors and selling meat directly to consumers.

Amanda Blair:

When we talk about it, that's a situation I've had a lot of people more recently maybe challenge that and say, well, it's all just going to go back the way it was. There's meat on the shelves now, so people are going to lose interest in buying directly. But I think maybe in a case where that was the only reason that consumers were coming to a producer is because there was no meat on the shelves, but I think if a producer can kind of be creative and think about it, then there's a lot of other reasons that consumers may want to buy directly from a producer. Those vary widely — it may be something specific about the meat itself, or a certain method that you use to produce it or a certain characteristic of that product.

Amanda Blair:

We're definitely seeing the shift in people wanting that farm-to-table experience or knowing where their food comes from, keeping their dollar to local. If the reason to come and buy directly is more based on some of those more attributes, I think then there's a potential for a producer to maintain that market and potentially grow it if they're willing to put the work in growing that enterprise.

Kasey Brown:

Absolutely. My family actually did a lot of direct marketing, so I love this topic.

Amanda Blair:

Sure.

Kasey Brown:

So speaking for producers, how far back do we need to start thinking if we're going to direct market our cattle? How do we get started? What do we need to think about first?

Amanda Blair:

Well, I think really thinking about your whole operation, in terms of finishing cattle, is this a situation that you're set up to do? Are you close to feed resources? Do you have facilities that you could feed or finish, whether it's a grass- or grain-finishing situation? Do you have those resources? Is it something that you can financially work with? There's a lot of risk in keeping those animals for a longer period of time.

Amanda Blair:

You aren't guaranteed that they're going to survive and do well. That's something to consider. Starting on a smaller scale might be something to consider as you're getting started in this. I think in terms of what can affect that ultimate product, we do a lot of research in an area called fetal programming and that shows us that even the gestating calf and how that cow is managed can affect the outcome of that product.

Amanda Blair:

We won't dive into that, but I think it really is a consideration — not just during that finishing period, but that animal's entire life. Has it stayed healthy? Has it stayed on a growing plane of nutrition? What's its nutrition been? Those things can all play into what that final product turns into. From a facility standpoint, I think there're options out there for people. You can think about, if you don't have those facilities or resources or that knowledge to actually finish cattle which takes a considerable amount of knowledge to be able to feed, especially a high-finishing diet or a high-grain diet. 

Kasey Brown:

And there are experts who do this.

Amanda Blair:

Right. You could seek out a custom finisher, a small feedlot in your area that maybe custom finishes, or a fellow producer that's doing this for their own cattle and maybe could add yours in on a custom basis. And that's going to allow you to keep ownership of those cattle and have sway over those marketing decisions, but maybe don't have to have those facilities and resources to hand. If you're wanting to do it yourself, I think those are things to consider. Do you have feeding capacity? What are your facilities like? If somebody came on your place and they looked around, that consumer perception is huge. Would they see clean pens, clean animals? Did you take the time to install a wind break to keep them out of the wind in the winter time?

Amanda Blair:

Those things that maybe we think about more in terms of animal comfort but also can affect performance, but from that consumer lens they can also influence our marketing. You could showcase something like that. Here's how we take care of our animals to ensure they're comfortable, but also ensuring high acceptable meat quality. So from those standpoints, that's some of those initial considerations just about thinking about getting into it.

Amanda Blair:

What kind of numbers do I have to put into this type of an enterprise? Do I have the facilities? Do I have somebody close by that I can do this with? And then making sure that you have a processor that you can go to. A lot of people came to us when we were talking about this and then realized that these small processors are booked out one to two years in advance. So building that relationship with the processor is certainly something you want to do before you've got cattle ready to slaughter.

Kasey Brown:

Right. Dr. Bakker, you were talking about the different types of processors. Can you tell us a little bit what producers should keep in mind when they are finding a processor, especially when it's so far out when they're so booked?

Christina Bakker:

Sure. I think it really comes down to the type of sales that you want to have. If you want to be able to sell beef by the quarter or the side, you can look into that custom processing because what that is essentially the cattle producer is going to sell the customer the live animal. And then they can deliver the animal to this processor for the owner of the animal, and then they can decide how they want the meat cut up themselves. But if you want to take it as a smaller scale and be selling individual cuts, then you've got to be looking at either a federally or a state inspected meat-processing facility. So knowing how you want your marketing to look and how you're selling is going to be pretty important in choosing which processors that you want to approach.

Kasey Brown:

One thing I hadn't realized, you mentioned with a lot of the small rural processors, but you can't sell any of that. Can you talk a little bit more about that?

Christina Bakker:

Yeah. So the meat that goes through a custom exempt plant, the owner of the animal needs to get that meat back. So the livestock producer can sell to somebody else. As long as somebody else is the owner of the animal, they can get that meat back. But once it's stamped not for sale, it's truly not for sale. So the butcher doesn't sell it to somebody else, and so you don't sell it to anybody else. All of those sales of the meat need to happen as the animal is live.

Kasey Brown:

Got you. Perfect. Dr. Blair, can we talk about some of the genetics that people need to think about to ensure that good high-quality eating experience?

Amanda Blair:

Sure. I think when you think about selling directly to consumers, one thing to really keep in mind is that consumers expect an eating experience as good or better than what they would get at retail. And I think most of them would expect it's going to be better. So to get that high-quality product, there's lots of different routes and there's lots of different programs, but I think one of the main things to think about if you're wanting to sell direct to consumers is that what they consider palatability is, they're going to desire beef that's flavorful, tender and juicy. And one of the easiest ways to accomplish that is by making sure you have some genetic potential in those cattle to marble.

Amanda Blair:

We know that marbling is highly related to a positive eating experience. That's why we see the premiums that we see for things like CAB® level product or Prime. Anything with a higher level of marbling is going to elevate the chances of having that positive eating experience. Now, that's not to say you can't have a good eating experience with other types of products, but one of the most consistent ways to do that is by focusing on marbling. And I think in terms of the genetics, I would say it's seeking out the cattle that have that genetic potential to marble.

Amanda Blair:

There's a lot of flexibility what those cattle might look like, but again it comes back to knowing what your cattle are. And sometimes producers just don't know that. They maybe sell their calves at weaning, and they don't know what goes on during the feeding or finishing phase or into the packing plant. So that's one aspect that we would highly recommend is trying to find an avenue to where you can figure out what your cattle are. Are they very high quality in terms of that quality grade or high marbling, or are they average? And that's something that you want to elevate through your selection criteria, but that's one of the things we would recommend looking at is, what's your marbling level?

Kasey Brown:

And how are ways or how can people figure out what their cattle are?

Amanda Blair:

Sure. There're different ways to do it. Some people on the live side can utilize ultrasound. Now, that's not a perfect method, but it is correlated to actual marbling if you have an ultrasound technician that can evaluate that for you. But the best way is to get into the plant and actually evaluate it or have someone do that for you. Have a university meat specialist come and help you where there are different trainings. We offer a program called Beef 2020, where producers get to come in and actually see carcasses and learn how that quality and yield grading is applied. It's something that you need to have a grader actually do. You're not going to sell this meat as, it's not graded as Prime or Choice, but it's knowing we've got a certain level of marbling there.

Amanda Blair:

Another way to go about that is putting your animals in a program like SDSU Calf Value Discovery. Other states have similar type ranch-to-rail programs where you can feed out your own cattle in a small group. You get the feeding performance data, but you also get the carcass data back from the plant, and you can see what those cattle look like. I married into an Angus family and that's a program that really set them on a path that they're currently on.

Amanda Blair:

Back in the nineties they did a Calf Value Discovery program and realized there was a $200 swing from the top to the bottom of that small group in terms of what the value was. Nowadays we're looking at more like a $700-$800 swing in the value of those carcasses. I think there are ways that you can get that, whether it be on the ultrasound of the animal all the way to getting that actual data taken in a small locker or through a ranch to rail or Calf Value Discovery program.

Kasey Brown:

Awesome. And it's so important to know what we have so we can make better products for our consumers.

Amanda Blair:

Right. And I think that's one thing that we kind of lose sight of is first of all, knowing what you have and trying to get a handle on that, but then can we consistently produce that? And I think that's one thing we've seen in the beef industry is, when you look back and you see demand on the decline from back in the nineties especially, we knew we had a consistency issue. And I think that's something that the industry as a whole has worked very diligently on is improving consistency.

Amanda Blair:

And we've seen quality grades continually climb. We've seen tenderness improve pretty markedly over that period of time. Kudos to all the producers out there that have really taken hold of this issue and said, we need nationally a more consistent product, but I think as you're thinking about a direct marketing program where you just have a few animals to market through that, it becomes even more critical because they can link that right back to you. It's not, there's some beef producer out there somewhere that produced this. They have a name and a face and know who to go to.

Kasey Brown:

Absolutely. So Dr. Bakker, you were talking about what to expect when you've got a finished animal, you send them to the packer, and you said you get a lot of yield grade questions. Can you tell us a little bit about that?

Christina Bakker:

Yeah. So the amount of meat that you get back, especially in the course... We see this a lot when its custom animals, where somebody will call up and they say, I had a 1,400-pound animal and I only got 400 pounds of meat back. And a lot of the time they actually go, well, the packer stole my meat. Well, that's generally not the case. So having that conversation of, where did the weight go? First talking about the dressing percentage, did you weigh that animal live with a full gut? And all of that goes away once the animal's a carcass. So making sure that you're being consistent and realistic with those expectations.

Christina Bakker:

Animals that are going to be a full beef influence as opposed to a dairy type are going to have a little bit higher dressing percentage, or if the animal was fatter or heavier muscled, you're going to see an improvement in dressing percentage there. But then it kind of all comes down to how you want that carcass treated. If you want it dry-aged or if you want it trimmed more than what you normally would see, that's all going to impact the yield that you're going to get from the final product. Also if you're going to get the entire carcass and boneless cuts, you're going to give up a lot of that carcass yield because you're throwing away all that bone. So take into consideration the different choices that you're making for what cuts you want back are going to make a big difference in your overall yield.

Kasey Brown:

Absolutely. You mentioned some really great resources or an infographic to kind of help with that consumer education. Can you tell me about that?

Christina Bakker:

Yeah. So there's a lot of universities that have developed infographics for this type of thing, especially in the last year when we've seen such a drive for getting meat from the small meat processors. So the University of Minnesota has a really great one, actually for all species not just beef, that goes through what to expect for the cuts that you can get out of a quarter of beef. And it even goes into how much freezer space that you need and the types of costs that you should expect, but then other universities also have that.

Christina Bakker:

So really a quick Google search and making sure that it comes from a university is probably really important, because there's a lot of other things that are on the internet that may not be as accurate. But it's really important for the producers to have an idea. So when they're talking to their customers if they're new to the custom-processing game, so that they can give them an idea so they're not caught off guard when they get their meat back. And either it's way more than they expected or they don't have the freezer space. Kind of covering all of those bases for somebody who's new to it.

Kasey Brown:

You even mentioned just knowing what kind of steaks you might get if you get a half or a quarter. Can you tell me some more about?

Christina Bakker:

Yeah. So one of the things that we see a lot is somebody says, I'm going to get a side of beef, but I'm going to get all these T-bones and all these rib eyes. That's how I'm going to get this carcass cut up. Well, only about 20% of a carcass weight makes up the rib and the loin where you get those cuts from, so there's 80% of that weight that you still have to deal with. So that's going to come in roast and ground beef whether you want it to or not, because they're going to be good steaks.

Christina Bakker:

The other thing is, if you're only getting one side, you're not going to get T-bones and strip loins and tenderloins because the strip loin and tenderloin are what make up the T-bone. So there's a little bit of a disconnect with the average consumer today on carcass anatomy and where different cuts come from. So having those conversations so that they know that, no, you can't get an entire 400 pounds of T-bone out of one carcass. So, manage those expectations appropriately.

Kasey Brown:

Perfect. And you both mentioned consumer education is so important. How to accurately portray your own marketing and finishing. Can you talk a little bit more about that?

Amanda Blair:

Yeah. I think that a lot of times when we get down to talking about the differences in how we market and what's special or differentiates our product from what somebody else is producing or how they're producing it. Those are all things that consumers want to know. There's more desire for knowing the story and the backstory of what's going on. I think that's what's driving a lot of them to this direct consumer space, but as a caveat, I think it's really important to not disparage the entire industry. Let's not cut off our nose to spite our face kind of situation. A consumer could come to you and you could tell them you've got the safest best meat in the whole wide world.

Amanda Blair:

And you could do it in a way that could scare them from purchasing meat just through the normal commodity chain. And that's really not what we want to do.They may come to you and they may not like your product, but does that mean that they go back and buy another protein source because you've given them information that's made them potentially scared of buying beef in general. So I think doing it in a way that you can lift as you climb. Do it so that you're promoting your product and what you do and how it's different, but not saying somebody else's is bad or unsafe or unwholesome. It's just maybe a final thing to think about as you're thinking about your marketing program.

Kasey Brown:

Perfect. All right. Excellent. It's about the end of our time, but I want to end on some good news. So tell me just something good that has happened to you recently. Doesn't matter if it's personal or business. Think of something good.

Amanda Blair:

I recently got to go down to the Angus Convention in Fort Worth. So that was a really great experience to interact with those different Angus producers and learn more about what they're doing to promote that breed. Again, we're a ranching family and the Angus cattle are near and dear, so it was really fun to learn the latest in some of the genetic technologies and what's going on. So it's been a really fun thing to come back and talk to the family about it. The little boys are just starting to get interested in what's going on out there and getting involved in the beef cattle side of things, so that's been really fun.

Kasey Brown:

Cool. Dr. Bakker, what's a good thing for you?

Christina Bakker:

I would say that probably it's both personal and professional for me is that... So once I finished my Ph.D., I post doctored SDSU for a while and I am local to SDSU. And as a result of the pandemic, I was actually brought on as a field specialist to be support for the small meat processors in South Dakota. And it was a temporary position. And so then as the year went on, we actually were able to find a position for me permanently at SDSU. So I'll be starting as an assistant professor here on Monday.

Kasey Brown:

Awesome.

Christina Bakker:

And that is good news.

Kasey Brown:

Yeah. Well, perfect. Thank you so much for speaking with me today. I really appreciate your insight. Listeners, if you want to learn more, you'll find our coverage of the Range Beef Cow Symposium in the Angus Beef Bulletin and the Angus Beef Bulletin EXTRA. So make sure you're subscribed to both of those publications. You can find access to both of these, plus our digital and audio extras at angusbeefbulletin.com/extra. That's E X T R A. And check out that Extra's tab at the top right. This has been Angus at Work, and thanks for listening.